The government has published amendments to three pieces of existing legislation in a bid to boost Cayman’s status as an emerging leader in tokenised funds.
On 6 Feb. the government revealed the details of the Mutual Funds (Amendment) Bill, 2026, Private Funds (Amendment) Bill, 2026 and the Virtual Asset (Service Providers) (Amendment) Bill, 2026. Cayman already has tokenised funds but these legislative amendments, which are open to consultation before being presented to Parliament, aim to create regulatory certainty.
Tokenisation involves funds using blockchain technology to create a digital representation of an investor’s equity in a fund. It sees funds using blockchain to improve their infrastructure – for example recordkeeping, transfer controls, settlement processes and investor onboarding – but the underlying legal ownership and investor rights remain unchanged as they are simply linked to the token.
Despite the tech-sounding name, a tokenised fund doesn’t refer to the actual investment focus of the fund itself, but just the form that investors may hold their equity interest. With more asset managers switching to tokenisation, the trend is vital to Cayman, which is the world’s largest offshore funds hub, with more than 30,000 investment funds holding US$16 trillion in total assets.
“This is good news for Cayman because it provides a very clear statutory framework for tokenised funds, which did see a temporary slip to the BVI in the last couple of years and we should start to see institutional interest in Cayman again,” said Matthew Taber, a professional director with Leeward.
Constantly evolving
The latest proposals demonstrate how Cayman’s lawmakers need to update legislation as global finance becomes increasingly interconnected with technology.
“The publication of these bills for consultation represents an important step in providing legal clarity for the tokenisation of fund interests within Cayman’s existing regulatory framework,” said Haymond Rankin, associate director for the fintech, virtual assets and banking sectors at Cayman Finance. “By addressing how tokenised mutual funds and private funds are treated under Cayman law, the proposed amendments help reduce uncertainty while maintaining appropriate regulatory oversight.”
Industry insiders also told the Compass that these latest proposals are a marked improvement from the initial amendments proposed midway through 2025. Various sources said the previous proposals were overcomplicated and unworkable. Following a concerted industry pushback the government responded with these latest proposed amendments.
Taber, who serves as a director for funds that are looking to register and tokenise their investment equity, says the new legislation “simply codifies” the best practices that good governance demands. Yet he believes “it is tremendously helpful when acting as a director, to have the backup in statute or regulation about something being a requirement rather than it just being me saying ‘this is what we should do’.”
There is also a more intangible benefit, which spreads beyond the world of tokenised funds: The boost to Cayman’s international image as a tech-savvy jurisdiction.
“One of the things we’ve experienced doing business in Cayman is that the government and the regulator have clearly made it a priority to build the laws, guidance and rules around this space and to be an early mover,” said Lennon Sweeting, the global managing director of RYKI, a global cryptocurrency broker and custodian that set up an office in Cayman.
“This tokenisation legislation is really on brand and it’s something the biggest financial firms in the world are already exploring,” said Sweeting.
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